Stay neutral to bullish bias for now
Continue all the long positions with trialling stop-loss. The immediate target is now at 23680, Nifty formed a Dragonfly doji candle on a daily chart
image for illustrative purpose
The last five days of price action indicate momentum and exhaustion. In this condition, keeping a tight stop-loss below prior day’s low will be the only strategy one can apply.
The equity benchmark indices closed at the new lifetime high on a dull trading day on Friday. The Nifty gained by 66.70 points or 0.29 per cent and closed at 23,465.60. The Nifty IT is the only loser on Friday with 0.87 per cent. The Auto, Consumer Durables, and Midcap indices gained by 1 to 1.34 per cent. PSE, Consumption, Realty, Smallcap, Oil and Gas, and CPSE indices gained over half a per cent.
All other sector indices closed with marginal gains. The market breadth is positive as 1554 advanced and 1113 declined. About 236 stocks hit a new 52-week high, and 139 stocks traded in the upper circuit. Mazdock Shipbuilders, HAL, Cochin Shipyard, and BEML were the top trading counters on Friday, in terms of value.
Nifty closed at the new lifetime high. It erased last week's volatility and closed much above the prior week's high. It formed a Dragonfly doji candle on a daily chart. The Nifty formed an indecisive bearish candle on all days this week but moved higher. The volumes were much lower than the average and recorded the lowest volume in three weeks. After trading in 283.75 points range during the last week, it finally closed with 170.75 points or 0.73 per cent gain. The index is decisively broken out of a rising channel.
The daily RSI closed above 60 for the second day but is not showing any momentum, as the intraday ranges were shrunk to less than 200 points. The last five days of price action indicate momentum and exhaustion. In this condition, keeping a tight stop loss below the prior day's low on a closing basis will be the only strategy one can apply. The index has not given any bearish signals yet. We can’t consider indecisive candles as bearishness. Now, the 8EMA support and the rising channel support lines are at 23,205 points. It can be considered as a weaker signal if it closes below this mark.
Continue all the long positions with trialling stop loss. The immediate target is now at 23,680. Stay neutral to bullish bias for now.
(The author is Chief Mentor, Indus School of Technical Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)
